Akorn shares lost more than a third of their value on Monday, the day after Fresenius pulled out of a deal first announced last April. The German company cited evidence of misconduct in Akorn’s reporting of drug development data to U.S. healthcare regulators.

Fresenius had warned in February that it could terminate the deal after starting an investigating into alleged breaches of U.S. Food and Drug Administration (FDA) data integrity requirements.

“We have found proof of material breaches of FDA data integrity requirements in Akorn’s operations, including product development,” Fresenius said in its statement on Sunday, adding that Akorn also violated other requirements of the merger agreement.

Akorn, which filed the complaint in a Delaware court, said the investigation “has not found any facts that would result in a material adverse effect on Akorn’s business and therefore there is no basis to terminate the transaction”.

It reiterated it would “vigorously” enforce its rights and Fresenius’s obligations.

Akorn shares traded at $13.64 on Monday, compared with the $34 that Fresenius had offered.

WIDER CHOICE

Shares in Fresenius initially jumped as much as 3.9 percent on Monday, with analysts saying the company was extricating itself from taking on an underperforming business. But the stock traded 1.1 percent lower at 1420 GMT because of concern over a drawn-out legal dispute.

The German group had hoped the acquisition would help it to offer a wider choice of drugs to hospitals and pharmacies, who tend to favour large suppliers.

A spokesman on Monday said that its Kabi subsidiary, a maker of generic drugs for injection and infusion, would expand its existing business to reach that goal.

“This can of course be accelerated via acquisitions.” the spokesman said.

Akorn was burdened last year by supply disruptions and competition for a range of products, such as ephedrine injections for low blood pressure under anaesthesia and lidocaine anaesthetic ointment.

Fresenius warned in November that weakness at Akorn could continue into 2018, but at the time reaffirmed the logic behind the deal.

Fresenius on Monday ruled out seeking a new deal on more favourable terms after an analyst discussed the possibility in a research note.

The German group’s separately-listed Fresenius Medical Care (FMC) subsidiary struck a deal on Saturday to sell its majority stake in Sound Inpatient Physicians Holdings for $2.15 billion, less than four years after buying it.

The shares dropped 3.6 percent as the group also cut its 2018 sales target because of lower reimbursement of calcimimetic drugs at its dialysis service business in the United States.

FMC had bought Sound Inpatient to build up a so-called care coordination business to expand into other types of therapy that kidney dialysis patients typically need.

Additional reporting by Patricia Weiss; Editing by David Goodman/Keith Weir